City Council proposes scheme to borrow $3.1 million (UPDATE2)

(March 15, 2007) Ypsilanti City Council took the first steps on Tuesday night to borrow an additional $3.1 million dollars to pay for capital improvements. The already cash strapped city, buckling under an ever increasing debt load and running up against state mandated borrowing limits is proposing a creative financing scheme to fund a $3.1 million dollar loan over 15 years.

Honeywell has proposed an extensive set of heating and cooling upgrades, as well as window, light fixture, and bathroom updates for City Hall, Police and Fire, Parkridge, Senior Center and a number of other city owned buildings. Honeywell is proposing the city borrow this money and suggests that through a combination of reduced maintenance and reduction in the use of outside contractors, as well as energy savings, the city can pay back the loan over a 15 year period of time.

Watch Video of City Council Meeting

In reality, what the city is doing is borrowing money to do capital improvements that have been deferred since 1995. Bill Bohlen, Manager for Public Works, pointed out in his testimony before Council that elected officials had balanced the budget each year for the past several years by forgoing needed capital improvements and deferring maintenance.

Bohlen also noted that City staff had looked at a similar program four years ago and after the former Department of Public Works head and city manager had studied the matter, it was decided to not bring it before council. It is unknown what if anything were concerns over the program four years ago. It may have simply been that the city was in the middle of the local road project and decided to not undertake a second significant capital improvement program at the same time.

The City has already amassed a very high level of debt since 1995. Current estimates peg the city’s debt near $70 million including water, road and sewer bonds, DDA street scape bonds, city hall facade debt, as well as some $25 million already borrowed for the struggling Water Street project.

The city council also squashed any chance for public input at Tuesday nights meeting while Honeywell officials were present and available for questions. John Gawlas (Dem, Ward 2) made a motion to remove audience participation after the Honeywell presentation. (3m:20s) Consequently, there was no opportunity to ask further questions about the proposal and plan presented by Honeywell. Only Mayor Schreiber (Dem) voted against removing audience participation.

After the presentation and discussion by Council, Schreiber polled the council members present asking if they wanted to proceed with a letter of intent. Gawlas, Schreiber, Lois Richardson (Dem, Ward 1), and Brian Filipiak (Dem, Ward 3) all said they wanted to proceed. Only Brian Robb (Dem, Ward 3) said he wanted to review the materials and carefully read the 120 plus page report from Honeywell before deciding if the City should proceed with a contract. While no final vote was taken by council, it appears Schreiber has the votes necessary to move forward with his plan that will burden the city residents with more debt.

Schreiber said the city plans to issue a letter of intent sometime in April. Brian Robb asked if a $3.1 million project would require a competitive bid under city rules. Council was told by city staff that there is no need to go out for bid, even for such a large capital project. Staff said Honeywell would be acting as the consultant engineer on the project and Honeywell would be sub-contracting the work to other companies and thus the city would not need competitive bids.

However, the largest single contract will likely go to Honeywell or a Honeywell subsidiary for well over $1 million. So it appears the City is using Honeywell to skirt around rules requiring competitive bids for any large project.

A copy of Honeywell’s proposal and presentation is available here. (Warning, the file is a very large PDF, 30MB)

Updated: March 16, 2007 9:17aOriginal Post: March 15, 2007 12:18a

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One Comment on "City Council proposes scheme to borrow $3.1 million (UPDATE2)"

Rob on Thu, 15th Mar 2007 1:43 pm

When I can get one of those @#$%-expensive “compact fluorescent” bulbs to last the 7 years they advertise, in my home– I’ll then spare a moment to think of a “greener” city hall– As for window “improvements?” Try some of that 3M shrink film with the sticky tape– Sure, it looks “tacky”– But it’s frugal as well– Something the council may be lacking these days….

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